Mere Difference of Opinion with AO not a Base to Exercise Revision Jurisdiction under Income Tax Act: ITAT [Read Order]

The Chandigarh bench of the Income Tax Appellate Tribunal ( ITAT ) has held that a mere difference in opinion with the Assessing Officer ( AO ) is not a valid base to exercise Revisionary Jurisdiction under the Income Tax Act, 1961. The Tribunal quashed the revision order under Section 263 of the act.

Mullanpur Garibdas Co-operative Multipurpose Society, the Assessee is a cooperative society. Its main function is to provide short and medium-term loans to its members for agricultural production, dairy farming, poultry and piggery, and to provide agricultural inputs like fertilizers and insecticides, etc. It had invested amounts with the Central Cooperative Bank, Mullanpur and the Central Cooperative Bank, Parol. Both these Banks are members of the SAS Central Cooperative Bank and claimed deduction of the interest earned thereon under section 80P(2)(d) of the act which was allowed during the assessment.

Subsequently, the CIT initiated proceedings under Section 263 and passed order holding that Assessee was not entitled to claim deduction under Section 80P as (i) Cooperative bank was not entitled to claim deduction under Section 80P due to the bar contained in Section 80P(4) (ii) the Assessee had invested with a cooperative bank and not with a cooperative society and hence, it was not eligible for deduction under Section 80P(2)(d).

The Bench noted that during the original assessment proceedings, a specific query was raised calling for details regarding the deduction claimed under Chapter – VIA, in response to which Assessee furnished details regarding claim made under Section 80P along with reasons.

The two-member Bench comprising A.D. Jain (Vice-President) and Krinwant Sahay (Accountant Member) reiterated that the satisfaction by the Commissioner must be one objectively justifiable and based on material either legal or factual, when available, it cannot be the mere ipse dixit of the Commissioner. Further stated that therefore, the Order of the Commissioner exercising jurisdiction under Section 263 of the Act could not be held to be sustainable in law.

The Bench observed that the assessment order has recorded the details called for during the assessment proceedings and the order also states that “the books of account were examined and no adverse inference was drawn and the exemption claimed under Section 80P was allowed”.

Section 263 of the Income Tax Act empowers the Commissioner of Income Tax to revise any order passed by an assessing officer if the Commissioner believes that the order is erroneous and prejudicial to the interests of the revenue.

While allowing the appeal, the ITAT concluded that the Assessee, being a cooperative society, is entitled to the deduction under Section 80P(2)(d) in respect of income by way of interest derived by it from its investments with the cooperative banks. The Tribunal set aside Section 263 order and consequently revived the original assessment order.

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